2 comments:

Here's my theory: Obama is a fiscal conservative and he wants to cut spending, but feels constrained by the politics, especially in his own party. So if the Republicans hold firm on the debt ceiling, great. He does the same thing he was going to do last time. He tells Tim Geithner to continue making all the debt payments, but to prioritize all other scheduled spending, and stop cutting the checks for the lowest priority stuff.

Geithner's list is created quietly in consultation with key members of both houses of Congress, and relying on earlier Simpson-Bowles recommendations.

Congress responds, not by expanding the debt ceiling, but by gradually failing over the course of the year to renew the spending on the things that have already been cut by Geithner's seemingly unilateral decision. Obama never seeks to renew them, telling the country that the crisis helped the country find out what things really weren't needed. Bipartisan fiscal train wreck gives the conservative Obama the spending-slashing opportunity he wants.

Here's my theory: Obama is a fiscal conservative and he wants to cut spending, but feels constrained by the politics, especially in his own party.

Obama is a Third WayNew Democrat trying to look as or more "serious" than Bill Clinton, famous for cutting welfare and running a budget surplus. New Democrats are essentially neoliberals rather than Keynesians.

Obama has a lot of support in Congress from so-called New Democrats, who all aspire to be Very Serious People. This is why the president appointed Simpson-Bowles and why he went with the economic team he did. It's also consistent with his foreign policy, making a mockery of the Nobel awarded based on false expectations.

Progressives are in the minority in the Democratic caucus, and most of them are clueless about monetary economics anyway. Even "socialist" Bernie Sanders, who appointed a stellar economic advisory board, has completely ignored it and gone the morons.